Need Help with Auto Carrier Company audit gone bad

[Naveen Mohan from New York]

I had to represent a client Auto CArrier Company in a New York State Workers Compensation Audit. New York State Workers Compensation is one of the most difficult organization to work with because they are semi governmental organization.

 

The focus of this audit was payroll subject to New York Sate Workers compensation Audit. This is a single owner with 5 auto truck carrier so it is a relatively small company.

 

I had my quarterly payroll returns and client had given me a print out of his Quickbook check register. All numbers tied in and there was no discrepancy.

 

Toward the end of the audit the auditor stated that the  payroll is only coming up to 10% of gross sale while industry standard is 40% of the gross sale. He said that he will compute payroll subject to Workers Compensation rate at 40% of the gross sale so the premium is coming out to be quadruple of what is borne by our records.

 

How do I handle it? Are there any fellow members out there who handle Auto Carrier trucking industry? Is 40% of gross sale is the going rate. How do I rebut this auditor's claim?

 

Thanks for your help.

 

 

Naveen Mohan  

[michaelmars]

first I would get a supervisor involved.  Maybe show on a sample of shipments that back up his unusual profitability.  I would also get them to back up the 40% number with demographics.  I think you are in a rural area, and as such your drivers may work for 1/2 the amount a NYC area driver might.  Is the owner one of the drivers and only drawing a small salary from his new business?  What is he hauling, I may be wrong in this but does BMW pay more than KIA to haul their cars?  Many issues to fight with.  I would also be a bit indigent that he is accusing the client of tax fraud by paying off the books.  [even if true], never hurts to get your back up a bit.

 

 

There are 3 auditors in my area and probably 2 times a week one is in our office since we have so many payrolls.  One was so nasty to staff that after his 4th time I called the company and said he is no longer allowed in our offices, they can switch the auditor or we can change insurance companies.  They switched auditors.  I know this isn't an answer to your issue but after you get done with the above audit, keep in mind that if someone is using arbitrary numbers to raise the premium, you can get rid of him.

 

A war story that I love:   My client owner/manager of a lot of residential real estate in NYC.  the agent wanted to add the value of the supers apartment to the income based on FMV.  Well in many nyc buildings, the apartment designated as a supers apartment is a basement apt  which doesn't get an official C of O.  thus the apt have no FMV for anyone except a super.  After the agent did research he agreed with me and we purely negotiated to charge a studio apt rate to each super.  Cost my client a minimal amount, didn't have to involved in appeals and set a president for all future audits.  We figured out that since some supers with families actually get a "real" apt this would all average out.  My point is you can negotiate some issues with a reasonable agent.